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ysjd.patel
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Joined: 12 Jan 2009
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Posted: 07 May 2009 at 16:27 \| IP Logged

The following information pertains to Jet Corp.'s outstanding stock for 1992:

Common stock, $5 par value

Shares outstanding, 1/1/92 20,000

2-for-1 stock split, 4/1/92 20,000

Shares issued, 7/1/92 10,000

Preferred stock, $10 par value, 5% cumulative

Shares outstanding, 1/1/92 4,000

What are the number of shares Jet should use to calculate 1992 earnings per share?

Ans:45,000

Can anyone explain me how?

Jams
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Joined: 26 Apr 2007
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Posted: 07 May 2009 at 16:57 \| IP Logged

share O/s=                                     20,000
+2/1 stock split         & nbsp;         & nbsp;        20,000
(you dont weight stock splits or stock dividends, you consider them as if they were outstanding whole year)
+shares issued                               5,000
(10,000*6/12)
=45,000

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ysjd.patel
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Posted: 07 May 2009 at 18:03 \| IP Logged

thanx jams

this solution i found in beckers....but I am not clear on stock split amount of shares....my doubt is why they did not take 40,000 x6/12?

Jams
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Posted: 07 May 2009 at 20:27 \| IP Logged

like i mentioned earlier in my post, you don't weight stock dividends and stock splits, you consider them for the whole year. hope its clear.

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jay_usa
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Joined: 16 Dec 2007
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Posted: 07 May 2009 at 21:52 \| IP Logged

Agree with Jams.

Ysjdpatel

Few days Back, I had the same question, you may want to check this post.

http://www.cpanet.com/cpa_foru/forum_posts.asp?TID=22747& ;PN=5

Hope it helps.

Thanks

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Jay CPA,CGMA,CITP,MBA

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